Against Austerity

How We Can Fix the Crisis They Made

By Richard Seymour

Pluto Press

Copyright © 2014 Richard Seymour
All rights reserved.
ISBN: 978-0-7453-3328-1

Contents

Preface, vi,
Acknowledgements, viii,
Introduction: The Bad News Gospel, 1,
1 Class, 29,
2 State, 66,
3 Ideology, 110,
Conclusion: Strategy, 151,
Index, 189,

CHAPTER 1

Class

Class is a communist concept. – Margaret Thatcher

Austerity is a class strategy.

But surely not? Aren’t we simply obliged to make cutbacks now that times are tough? Who can honestly say that the country isn’t broke? It would be nice to keep spending on all the gold-plated public sector pensions and bedroom scroungers and wasters, but there simply isn’t enough money in the kitty, darlings. People will just have to pull their socks up. And tighten their belts. And figuratively rearrange other parts of parts of their apparel until the mess is sorted out.

And isn’t ‘class’ itself something of a relic anyway, like the Madonna sex book, or a paid-for copy of London’s Evening Standard? Or, at best, an abstraction remote from the messier realities of everyday life, like logging on to Twitface, sharing electrifying hoof fetish porn, and then ordering copious quantities of something via eBay to get richly and joyously shit-faced with? What sort of political fundamentalist bangs on about ‘class’ while the inhabitants of online heterotopias are obliviously fapping away together? What room is there for ‘class’ in these many proliferating life-worlds?

Despite these well-thought-out objections, and many more like them, I will insist on advocating the bland thesis that austerity is a class strategy. What else could it be? There is no socially neutral way of interpreting and resolving the multiple crises of production, politics and ideology triggered by the ‘credit crunch’. There is no way that any strategy for confronting these problems could not respond to definite social interests, whether by proactively seeking to cater to them, reactively adapting to pressure, or anticipating and out-manoeuvring attempted obstructions. And these interests, whether concentrated in the form of the investment banks or the TUC, look a great deal like class interests.

The programme of austerity itself seems straightforward, as political scientist Mark Blyth explains: ‘Austerity is a form of voluntary deflation in which the economy adjusts through the reduction of wages, prices, and public spending to restore competitiveness, which is (supposedly) best achieved by cutting the state’s budget, debts, and deficits.’ Yet the case for this is not, on the face of it, a compelling one. The austerians maintain that a programme of cuts, properly implemented, can boost growth. The simple version of the argument is that government spending crowds out private sector spending. Freeing up wealth by cutting the tax burden should spur investment and dynamism. The more elaborate version is that cuts, or ‘fiscal consolidation’, will increase the confidence of investors, lenders and households. Knowing that the government’s finances are being put in order, and that this is part of a sustained policy, they can look forward to a period of renewed growth, and thus expect more income in the future. As a result, households will borrow to spend, capital will invest, and banks will lend, thus precipitating a new phase of economic expansion. This is the austerity road to prosperity: expansionary austerity, as it is known.

The origins of this particular idea can be traced to an attempt by economists to theorise the practice of Western European governments undergoing fiscal consolidation in the 1980s. The argument essentially expressed the view of the West German government, or more specifically the Council of Economic Experts which advised it. It was the West German leadership in particular that advocated austerity as a basis for a future, leaner growth model for Europe.

Of course, this contradicts the macroeconomic commonplace that cutting public spending at a time of economic weakness merely reduces consumer spending power and thus leads to lower growth. With lower growth, the state will take in less revenues with which to pay its debts. Any deficit will be increased, bond holders will become less confident of the state’s ability to pay its debts and will thus drive up the cost of government borrowing, and the government will be forced into a new round of cuts merely to keep up its repayments. This sort of vicious cycle has already blighted Eurozone economies such as Greece and Ireland.

The empirical evidence from the UK, according to the Office for Budget Responsibility, seems to support the claim that austerity policies reduced growth in the UK in 2011–12 by around 1.4 per cent. A 2011 IMF working paper points out that much of the empirical support for the claim that austerity is expansionary is based on studies which are biased by the inclusion of effects which don’t arise from the cuts themselves but from external factors. The paper estimates that far from producing expansion, ‘a 1 percent of GDP fiscal consolidation reduces real private consumption over the next two years by 0.75 percent, while real GDP declines by 0.62 percent’.

Of course, the IMF has experience of implementing austerity, generally in the form of ‘structural adjustment programmes’. These programmes have usually been applied to countries which urgently need to borrow. The result, almost invariably, has been to suppress growth. It is not even clear if the short-term goals of these programmes – improving the balance of payments and reducing inflation – are actually achieved. The research is ambivalent on this point. But the evidence is that, for as long as austerity is implemented, growth is reduced.

However, it isn’t good enough simply to point this out. The pro-austerity argument acknowledges the conventional ‘Keynesian’ macroeconomic wisdom, but nevertheless insists that in certain limited conditions fiscal austerity can be paradoxically growth-inducing: provided fiscal austerity is part of a sustained reform, provided private sector business really believes that the tax burden will decline over the long term, then it can be expansionary. It would be a mistake, both analytical and political, to dismiss this too lightly.

Further, it would be just as mistaken not to acknowledge that there is something eminently rational, from a certain point of view, about the desire to reduce the amount of public debt. Capitalist democracies have experienced a rising level of debt since the 1970s, linked to weak growth, higher structural unemployment, and a growing tax resistance on the part of the rich. And since the banking crisis became a generalised economic crisis, this has turned into a sharp rise in public debt. US, UK and Eurozone states saw an increase in public indebtedness by between 20 and 40 per cent of GDP in the years from 2007 to 2009.

There is a tendency on the Left to relativise about this, invoking by comparison the extraordinarily high levels of public debt during the Second World War. But there are rational reasons why those same capitalist democracies sought to constrain public debt during the 1990s, and why they seek to do so now. The problem with austerity as a debt-reduction strategy is not necessarily that it identifies debt as an issue. It is, firstly, that it falsely and tendentiously blames debt on the tendency of democratic politicians and state bureaucrats to inflate budgets, rather than looking at the growing gap between the structural commitments of national states and the declining growth of national economies. Secondly, to the extent that debt-reduction is a rational priority, it is not universally so. It is only rational if one accepts that capitalism, and specifically neoliberal capitalism, is the only game in town. And, if one accepts that the interests of elites – businesses and banks – are the most important interests in any national economy.

With this said, what kind of class strategy could austerity be?

No Such Thing as Society: Classes and Neoliberalism

A few words about the ontology of social classes are necessary before we proceed any further. This is because everything you know about class is just so much teak-hued horseshit. It isn’t your fault. The attempt to obscure, or ‘disappear’, the concept of class is a deliberate, politicised mission.

Class, argued Mrs Thatcher, is a ‘communist concept’. In a way, this is obviously preposterous. The valences of class are as varied as those of ‘individual’, ‘nation’, ‘people’ and so on. But as a disciple of Friedrich Hayek, Thatcher had a specific point in mind. This is linked to her more famous insistence that ‘there is no such thing as society’, only individuals and families.

What Thatcher meant is that at base, ‘society’ is composed of nothing but entrepreneurial, self-maximising units. Collectivities are at best ‘thin’ associations, or convenient fictions that enable people who are otherwise in permanent rivalry to work together for a shared goal. But these are potentially dangerous in that they can distort ‘the market’ and suppress individual freedom – which is nothing other than the freedom to be an entrepreneur. It is typical of neoliberal ideology that this rather bleak, brutal, Social Darwinist perspective of eternal struggle and competition is conveyed in the cuddly language of self-help books. Mrs Thatcher explained: ‘I remember practically exploding when I heard some Americans talking about “the underclass,” as if they weren’t individuals with feelings. Each one is entitled to his own dignity, to develop his talents and abilities. Underclass? Socialist claptrap!’

Intriguingly, US Congressman Rick Santorum attempted to emulate Mrs Thatcher in August 2013 when rallying the Republican faithful. He said:

What does Barack [Obama] talk about all the time? The middle class. Since when in America do we have classes? Since when in America are people stuck in areas, or defined places called a class? That’s Marxism talk. When Republicans get up and talk about middle class we’re buying into their rhetoric of dividing America. Stop it.

This was, again, tone deaf and absurd. The ‘middle class’ in US culture is the-class-of-no-class. It is a broad, indeterminate mass of people ranging from cleaners to stockbrokers, a pea soup in which classes are dissolved. Not only does this have nothing to do with the Marxist conception of class; it is not particularly relevant to any rigorous conception of class.

Why do the more doctrinaire neoliberals become so defensive about the concept of class that the mere use of the term is sufficient to get their sinewy lips beating together? The concept of class is dangerous for neoliberals because it cuts against the grain of their social theory, permitting that there are forms of collective organisation that have nothing to do with enterprise. It authorises the perpetuation and expansion of collective forms of organisation that lead to the gradual, ineluctable suppression of capitalist freedom. Which, to neoliberals, does look a great deal like communism. However, Mrs Thatcher’s prohibition on even acknowledging class, denying it any ontological validity whatsoever, has been less successful than the claim that class is either a thing of the past, or not what it used to be. And there is an intelligible basis for this latter claim. Real developments in the neoliberal period rendered a certain way of talking about class, a certain language, dated. The figure of the ‘shop steward’ as the cutting edge of irrepressible subversion disappeared. The ‘big battalions’, those groups of workers whom no government could tame, were broken one by one. The seeming obviousness of certain connections – say, between workers and left-wing politics – was disrupted. The cultural salience of the male-breadwinner industrial workforce declined. Increasingly, classes were stratified by income, property, security and status, so that new social images of class could take root. These changes did not all simply result from neoliberal practices; rather, neoliberal politics took hold of existing tendencies and organised them. And the results have had profound consequences for how austerity is deployed, and resisted, today.

Aside from Thatcherite attempts to kill the notion of class, there are the more diffuse and routine representations of class within popular media and culture. This is the main centre of pedagogy about class (and race, gender, sexuality, and so on), and in so far as class is discussed, it is usually through morally informative anecdotes – the ‘feral’ underclass, the gluttonous badly eating poor, the lazy single mums on welfare, the ‘chavs’ and so on. I don’t need to plough terrain already consummately tilled by Owen Jones. Instead, what I want to do is advance a few general positions about class, and see how they can help us interpret the unfolding of the crisis and the ensuing austerity project.

1) Class is not an ethnicity, a tradition, or an interesting biographical trait. It has nothing to do with cloth caps and top hats. Or at least, that conception of class, linked to certain sentimental tea-towel memories of London’s East End, is not useful here. Neither is it merely a particular distribution of money or assets, or a job hierarchy. Those are merely outward attributes of class. The central question about class societies is who, through strategic control of the production process, nets the surplus produced in a society; and who, by being excluded from that strategic control, gets to produce all that surplus.

2) Class is nothing but a relationship. Another way to put this is to say that classes only exist in relation to one another. To take a couple of obvious historical examples: there could be no feudal nobility without a peasantry, as the former depended upon the latter to produce tribute, and the latter would not have existed as a subordinate class without the nobility; likewise, there could be no Roman slaves without citizens and nobles, and vice versa, since the toil of slaves provided the surplus from which a citizenry and a nobility could be sustained, while the slaves would not have existed as such without their rulers. This is important because there is a tendency for market researchers and sociologists to coin a profusion of new ‘classes’ without due rigour – the ‘precariat’, the ‘new affluent’, the ‘salariat’, ‘the underclass’, and so on. These ‘classes’ are described merely by a list of positive or negative attributes, without any sense given of their necessary relationship to other classes.

3) This relationship is necessarily, though not exclusively, antagonistic; otherwise it is hardly a class relationship. It is necessarily antagonistic, because the relationship revolves around the control of a surplus of wealth produced in society. In so far as a class rules, it disposes of this surplus in one way or another in its own interests; other classes have every reason to resent and resist this, unless the class which rules can somehow offer them an incentive to acquiesce. But it is not exclusively antagonistic, because for a society to work, for production to happen, for anything to be reproduced in its normal state, there has to be a minimum of cooperation.

4) Classes cannot exist without continually reproducing themselves. The process of this reproduction gives us a unique vantage point for understanding classes. Instead of trying to work out exactly who is rich and who is poor, as if class analysis was like a census, we can instead ask some more productive questions. What kind of society and what kind of relations are being reproduced, and by what mechanisms? How does this class help reproduce the society, and how does it reproduce itself in doing so? What role do states and other institutions play in this process of reproduction?

In a capitalist society, the two major social classes are labour and capital. Capital, the ruling class, dominates by virtue of its strategic ownership of the means of production, its dominance of markets and the tremendous political and cultural strengths that come with these. It reproduces itself by investing its money in labour, equipment and infrastructure to produce commodities for sale, and generating a profit from the transaction. Labour, the working class, is dominated by virtue of its lack of any significant control of the means of production. It can only sell its labour power, its ability to work, in order to survive and reproduce itself. In this context, capital is able to ensure that a surplus – over and above what is required to cover wages, salaries and overheads – is produced and is able to recover this as profit.

That all seems simple enough. But beyond this it becomes quite complex. There is, after all, a significant multi-layered middle class, consisting of small business owners, professionals, lone traders, and junior and middle managers. These are layers of people who are separate from labour by virtue of their greater autonomy and authority, but who do not rule since they do not profit by extracting surplus from workers. Further, the main classes are divided among themselves. Capitalists compete, by definition; the system is driven by it. So the capitalist class divides over different sectoral interests, falling roughly into fractions representing – for example – manufacturing, commercial services and financial capital. Labour is increasingly stratified, from the least secure, lowest paid migrant worker to the reasonably well-organised skilled public sector worker. This is to say nothing of what happens when the intersections of gender, race, sexuality, nationality and so on are taken into account.

It follows from the above that the unity of classes – in pursuit of political objectives or whatever – can in no way be assumed. This is something that has to be continually worked on and produced. The Gramscian name for this practice is ‘hegemony‘. This is not the same thing as domination. Rather, it involves a section of a class exerting political, intellectual and moral leadership within that class, or within an alliance of classes.

(Continues…)Excerpted from Against Austerity by Richard Seymour. Copyright © 2014 Richard Seymour. Excerpted by permission of Pluto Press.
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